But before we discuss deeper into this I guess the best start for this is for us to define what really an investment is.

Investment in simple term means a set aside money put in something that gives you back money.

Simple but a lot of people still don’t get the idea about this. A lot of people put money in a savings account and call it already investment. Yes the bank gives you back money by way of interest. I will call this sound investment if we are in the 70’s or 80’s where interest on savings are in the range of 5-10% but now I would like only to put money in a savings account for emergency fund purpose because banks nowadays pay 0.5-1% only even time deposit are within that small range.

That is why we have some alternative vehicles or funds where we can put money to give us back money. Remember the definition investment is a set aside money that will give you back money. That is why if you read my post about how I divide my earnings into 6 funds one of them is Investment Fund. We have to set aside money for this purpose.

Now let’s focus on investments. I will discuss some investment vehicles and how does these investments give back money.

Many say put it in small business like a computer shop, a taco shack, or a small food cart. Yes this is a good step to becoming into an entrepreneur but if you are inexperience and your funds are limited you might not be able to start it. So while accumulating enough money for the startup engage yourself in learning how such small business operate. Look at established small businesses around you and learn how they started, how they struggled and how they became and continually be successful amidst the economic slowdown. Business gives us back profit. What we can do with the profit is either to re-invest it to the small business, set it aside for another venture, or save it in a savings account for emergencies.

Some banks now offer what we call Unit Investment Trust Fund or UITF. The amount needed to invest in a UITF ranges from 10,000 to 100,000 pesos and has various holding period. UITF are investment funds, not a deposit that is why it is not covered by PDIC insurance, return depends on the performance of the stock these funds are invested. This is a way which you indirectly invest in stocks. You get what these funds earn.

Stocks are still one of the best investments. We earn either through dividends or price appreciation. But the problem is people wanted to profit right away. In times like these the best way to invest is to buy stocks of great companies at the lowest possible price and hold them until their price rise to about 30-100% of their price today. It may take long let say 6 months to 5 years waiting period and people always pull out their investments when their stocks are down and so they suffer the loss.

I am not saying invest now right away. Always make it a golden rule to know where you are putting your money. Ask but ask the right person. Ask people who did it and made money and still make money or still not pulling their investments at this very time of global economic crisis. It only means they know something that others don’t know that is why they are still holding onto their investments even if price of their stocks went down up to 20-50%.

Also always remember to invest at your own risk. Investing is not a gamble; it is more of a discipline to be learned. That is the big difference between the true rich and the show off rich people. Find a truly rich person and learn from them. Bo Sanchez calls them “mentors’, Kiyosaki call them “Rich Dad“, and other people call them their “Idol”. Go out and seek these people. Listen to them and learn. Apply what you learn from them in small scale and little by little make it to the big deal. If at first you failed it is good that you only use a small amount of your hard earned money and the bonus is you learned something out of that misfortune.

Life is a learning process and mistakes are part of it. So if you made a mistake don’t worry as long as you learn something out of it.

So are you investing at this time of crisis? Well it’s your call, it’s up to you.